The Flexibility of NFT Exchange Platforms

Evolving NFT Exchange Platforms

When most people hear about non-fungible tokens (NFTs), they think about the multi-million-dollar sales that are going on in the art world. While those are interesting, it’s not what most people are using them for — or what they will be using them for in the future. While no one yet knows the myriad of ways NFTs will eventually be used, they’ve already proven useful in many sectors of B2B eCommerce. 

NFTs are a powerful vector for managing the authenticity of something and being able to track and keep a precise and accurate historical view of its history and ownership. They also prove that something is what the seller and the buyer believe and say that it is; it becomes a digital ledger. The interesting thing about the digital ledger and the concept with NFTS are that they're relying on the benefits and nuances of blockchain and smart contracts for any eCommerce business model. The overall concept is fungibility, which can be explained by this example:  

If you had five $1.00 bills and you didn't want to carry around all five $1.00 bills, you could exchange that for a $5 bill and only have to carry a single $5 bill. That is an example of something that is fungible. 

Conversely, the original Mona Lisa painting is non-fungible in the sense that you're not going to exchange it for something that represents the Mona Lisa. It is the Mona Lisa, and there's only one. That's something that we can prove, to show that it's unique and valuable because there is only one and it can’t be split. That's part of the nature of its value, and it's critical to its value that it be provable that it's unique. (Many fraudulent Mona Lisa's have been created, and much effort has been put into proving that the original is the actual Mona Lisa.) 

The concept is that there's value to the authentic Mona Lisa because it’s such an important piece of art, a unique and valuable painting. The fact that there's only one means that supply and demand rules. B2B eCommerce platforms can take this concept into the digital realm. 

So how does this apply to business and business scenarios? The fact is, many businesses aren’t waiting to see what NFTs can do for them — they’re creating their own scenarios. 

Take the idea of collector’s items. Topps trading cards is creating digital NFT cards. These cards allow sports players to be represented in a unique and limited set of NFT's for a particular player. Like traditional paper cards, digital cards can do things like represent different aspects of the player’s life or their sports capabilities. Just like a limited-edition sports card, these different NFTs are non-fungible and cannot be replicated. Though they’re digital, they are unique. 

Such cards are tokenized using a blockchain, then the information is created for/added to a hash. Hashes are basically one-way encryption of data, and the hashing algorithms that are in place with cryptocurrencies — such as Ethereum, Cardano, Solana, and other NFT-friendly crypto coins — allow the NFT exchange platforms to have very robust capabilities. In the example of the NFT trading cards, consider the parallel to physical baseball cards: Some cards are worth more than others, often based on the rarity of the card and player notoriety. 

How does this apply to business? Consider digital rights with music, intellectual property, or trademark patents. The concept of NFTs can apply to anything that can be represented digitally and have a blockchain for what the rights are. For instance, someone might want to purchase the rights to a trademark outright. They could also have the agreement in the blockchain saying that they have to renew every year, or they need to renew it every 1000 times they use the trademark. 

Similarly, maybe a deal is made to remit a royalty payment for music, and it needs to be very easy for a creator of the music who doesn’t have time to manage everything and follow up on all the legal aspects; they just want to focus on making their art. By its nature, with it being blockchain as a core component and having smart contracts built-in, it enables the seller to focus on providing their unique values, while the buyer can focus on consuming and not having to deal with as much overhead with implementation and compliance of whatever the agreement was. By the definition of the smart contracts portion of it, some of the aspects built into the B2B blockchain can be respected based on digital platforms that can ensure that smart contracts are observed and enforced. The best NFT platforms can make that happen with ease. 

NFT Exchange Platforms for Tracking

Another example would be if you're dealing with a marketplace that is selling items purported to be unique, or at least expensive and easily identifiable. Maybe it's a particularly expensive piece of equipment and the buyer needs to verify that it's the unit original to the manufacturer. Every part of a device, every subpart, or even the raw materials that went into something could be trackable using blockchain. Parts of it that are unique and substantially differentiating could be added to the hash. 

This solves many problems when dealing with commercial transactions, especially when you need provability of the fact that the product is an OEM part from a particular lot number and serial number, and that the manufacturer has sourced it from materials of a certain quality level. It can also ensure a better warranty and better terms for service and support, because the NFT proves a uniqueness to this item that removes some of their risk. All of this can be integrated during B2B eCommerce development. 

NFTs can also help prove ownership of expensive items. A common scenario is with something like a very rare diamond, or an NFT could be created for an office building that's sold online. Transfer of ownership could have this very robust authenticity and include legal proof of who owned it when. This real estate proof of ownership is very helpful in countries that have trouble with their legal system, and therefore have trouble with the commercial side of their country. It's very easy to bribe government officials in some countries to change the name of the owner for land or other expensive items. This gives ownership to someone else with little recourse for the owner. 

This concept of NFTs can also be particularly helpful in countries and regions where digital piracy is rampant. There might be general abuse of licensing and rights of the original creator and the purchaser. NFTS are able to take advantage of the blockchain ledgers and smart contracts. This can be very extensive for commercial activities because it can include trademarks and rights-of-use, copyrights, or patented trademarked items. All of these can be monetized through this digital format and granularly tracked with ease using the smart contracts and blockchain. This information can then feed into your eCommerce framework along with sales portals and websites. 

If you look at the mechanics behind what happens with non-fungible tokens and NFT exchange platforms, there are many benefits whenever you're purchasing expensive items because of the ledger and how ownership is transferred with cryptocurrency. But businesses run into the problem of very high transaction fees associated with cryptocurrency in general. (One of those most commonly used cryptocurrencies for high-end items is Ethereum, but the high fees apply to most well-known cryptocurrencies.) Transactions fees typically run about 10% for buyer and seller, which is unreasonable if you consider traditional commercial transaction fees.  

One of the primary reasons for that fee is the energy it takes to create/verify blockchains and the actual hashing that's going on. Running computers and servers all over the world takes a considerable amount of energy production. That transaction information via this blockchain and smart contracts and ends up getting distributed and hashed across the entire network. Over time, this gets built in and all these servers that are running are hashing this data into the distributed ledger.  

Competition has created alternatives to alleviate the highest transaction fees associated with cryptocurrency transfer. These new cryptocurrencies take advantage of similar capabilities to Ethereum but have lower costs. The best NFT platforms can easily swap APIs for different cryptocurrencies so that the latest — and least expensive — options can be taken advantage of. 

Whenever you’re choosing an eCommerce and marketplace development team, we encourage you to work with someone who has experience working with platforms and APIs. Clarity has supported marketplaces and is a B2B eCommerce development company that has experience working with some of these newer technologies that may have lower transaction fees. 

Chose the Best NFT Marketplace Platform

What companies decide to do with NFTs is ever-changing, and the market itself is always evolving. Because of these changes, it’s important to find the best NFT Marketplace options available that are as flexible as the latest and greatest opportunities. Of course, it’s vital that you preserve the functionality of the rest of your eCommerce marketplace as changes occur. 

When you're working with integration developers, you want to make sure you find a provider that's comfortable with how these concepts work, that they’re up to date with industry changes, and that they can plan for the future of your B2B eCommerce platform. There are going to be capabilities in the future of NFTs that we haven't thought of today, so you should work with a partner that has direct experience working in this space.